June 5, 2013 Welcome New Members Leo S. Mackay, Jr. Chair, DII Working Group.

June 5, 2013

Welcome New Members

Leo S. Mackay, Jr.Chair, DII Working Group

New Members

The Defense Industry Initiative on Business Ethics and Conduct

An Overview

Promoting a culture of ethical conduct within the defense industry

•In 1985, defense acquisition at height of the Cold war– allegations of criminal misconduct and government mismanagement in

defense contracting– “Ill Wind” influence peddling scandal was the (unfortunate) poster child

•President Reagan appointed the Packard Commission, or “The President’s Blue Ribbon Commission on Defense Management,” to recommend reforms

•The Packard Commission, February 1986 Interim Report– waste, fraud and abuse had eroded the public’s confidence in the defense

industry and the Defense Department. – The Commission urged defense contractors to improve the defense acquisition

process through greater self-governance

The Background

“To assure that their houses are in order, defense contractors must promulgate and vigilantly enforce codes of ethics that address the unique problems and procedures incident to defense procurement.”

“They must also develop and implement internal controls to monitor these codes of ethics and sensitive aspects of contract compliance.”

From the Report

The Response

• Jack Welch of General Electric and the CEOs and senior officials of 17 other defense contractors voluntarily met • Created the Defense Industry Initiative on Business Ethics and Conduct. • drafted the principles that became central to the DII. • These principles first appeared in the Appendix to the Packard

Commission's June 1986 final report

• By July 1986, 32 major defense contractors had pledged to adopt DII’s core principles.

• Have and adhere to written Codes of Conduct;• Train employees in those Codes;• Encourage internal reporting of violations of the Code, within an

atmosphere free of fear of retribution;• Practice self-governance through the implementation of systems to

monitor compliance with federal procurement laws and the adoption of procedures for voluntary disclosure of violations to the appropriate authorities;

• Share with other firms their best practices in implementing the principles, and participate annually in “Best Practices Forums”; and

• Be accountable to the public.

Original DII Principles

• Aeronca Inc.• Allied-Signal, Inc.• American Telephone & Telegraph Co.• The Boeing Company• Burroughs Corporation• E-Systems, Inc.• Eaton Corp.• FMC Corporation• Ford Aerospace & Communications

Corp• General Dynamics Corporation• General Electric Company• Goodyear Aerospace Corporation• Grumman Corporation• Hercules Incorporated• Hewlett-Packard Company

• Honeywell Inc.• Hughes Aircraft Co. • IBM Corporation• Lockheed Corporation• Martin Marietta Corporation• McDonnell Douglas Corporation• Northrop Corporation• Parker Hannifin Corporation• PneumoAbex Corporation• Raytheon Company• Rockwell International Corp.• The Singer Company• Sperry Corporation• TRW Inc.• Textron Inc.• United Technologies Corporation• Westinghouse Electric Corporation

Original DII Signatories

•DII is a nonpartisan, non-profit association of responsible U.S. defense companies– committed to conducting business affairs at the highest ethical level and

in full compliance with the law– our members are the professional ethics officers, CEOs and senior officials

of 82 top defense companies serving the United States military•DII provides resources and assistance to help train hundreds of thousands of defense-industry employees in ethics and compliance. •DII holds regular meetings and conferences to share best practices•DII mentors suppliers and new firms in how to comply with the laws and regulations that govern U.S. defense companies.

Who We Are Today

The DII Principles were updated in March 2010:

We, the members of the Defense Industry Initiative on Business Ethics & Conduct (DII), affi rm our commitment to uphold the highest ethical standards in all our business dealings with the government, as expressed through the following principles:

1.We shall act honestly in all business dealings with the U.S. government, protect taxpayer resources and provide high-quality products and services for the men and women of the U.S. Armed Forces.

2.We shall promote the highest ethical values as expressed in our written codes of business conduct, nurture an ethical culture through communications, training, and other means, and comply with and honor all governing laws and regulations.

The DII Principles Today

3. We shall establish and sustain effective business ethics and compliance programs that reflect our commitment to self-governance, and shall encourage employees to report suspected misconduct, forbid retaliation for such reporting, and ensure the existence of a process for mandatory and voluntary disclosures of violations of relevant laws and regulations.

4. We shall share best practices with respect to business ethics and compliance, and participate in the annual DII Best Practices Forum.

5. We shall be accountable to the public, through regular reporting by DII to Congress and the public. These reports will describe members’ efforts to build and sustain a strong culture of business ethics and compliance.

The DII Principles Today

• DII Steering Committee: The DII is governed by a Steering committee, a policy-making body comprised of prominent defense industry CEOs

• DII Working Group: The DII Working Group are volunteers, comprised of one representative from each Steering Committee organization, who direct the activities of the DII

DII Leadership

DII Steering Committee ChairMarillyn A. Hewson

President and Chief Operating Officer Lockheed Martin Corporation

DII Working Group ChairLeo McKay

Vice President, Ethics & Business SustainabilityLockheed Martin Corporation

DII CoordinatorAngela B. Styles

DII Leadership

DII Steering CommitteeMarillyn A. HewsonChair, DII Steering CommitteePresident & Chief Operating OfficerLockheed Martin Corporation

William M. BrownPresident & Chief Executive OfficerHarris Corporation

Wes BushChairman, CEO & PresidentNorthrop Grumman Corporation

Louis R. ChênevertChairman of the Board & Chief Executive OfficerUnited Technologies Corporation

David M. CoteChairman of the Board & Chief Executive OfficerHoneywell International Inc.

Scott C. DonnellyPresident & Chief Executive OfficerTextron Inc.

Linda P. HudsonPresident & Chief Executive OfficerBAE Systems, Inc.

Clayton M. JonesChairman, President & Chief Executive OfficerRockwell Collins

David JoycePresident & Chief Executive Officer, GE AviationGeneral Electric Company

John P. JumperPresident & Chief Executive OfficerScience Applications International Corporation

Dennis A. MuilenburgPresident and Chief Executive OfficerBoeing Defense, Space & SecurityThe Boeing Company

Phebe N. NovakovicChairman & Chief Executive OfficerGeneral Dynamics Corporation

William H. SwansonChairman & Chief Executive OfficerRaytheon Company

Harold L. Yoh IIIChairman & Chief Executive OfficerThe Day & Zimmermann Group, Inc.

Leo S. Mackay, Jr. Chair, DII Working GroupVice President, Ethics & Business ConductLockheed Martin Corporation

Jamal AhmedSenior Director, Internal Audit and Ethics Program DirectorDay& Zimmermann, Inc

Charles D. ChadwickVice President, Contracts and Business ConductBAE Systems, Inc.

Patricia J. EllisVice President, Business Ethics and ComplianceRaytheon Company

Sandra Evers-ManlyVice President, Corporate ResponsibilityNorthrop Grumman Corporation

La Guardia N. MyersStaff Vice President - EthicsGeneral Dynamics Corporation

Eric KantorGE Aviation Legal OperationAssociate General Counsel & Chief Compliance Officer

DII Working GroupLaura K. KennedySenior Vice President, Ethics & ComplianceScience Applications International Corporation

Denise KingDirector, Business ConductHarris Corporation

Danny LeeVice President & General CounselTextron Systems Corporation

Dorene A. MacVeySenior Director, Ethics & Business ComplianceRockwell Collins, Inc.

Ellen MartinVice President, Ethics and Business ConductThe Boeing Company

Paul Robert, Esq.Associate General Counsel & Director, Contracts & ComplianceUnited Technologies Corporation

Douglas E. Perry, Esq.Vice President, Global ComplianceHoneywell

Angela B. StylesDII Coordinator

• Current Members – 82 Signatories• New Member Companies Since Last BPF

– Applied Research Associates, Inc.– Engility Corporation– Kforce Government Solutions, Inc.– MTS Systems Corporation– SAP National Security Services (SAP NS2)– Supreme Group USA, LLC

• Monthly Meetings Among Working Group Members

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Organization Overview

• Greater Engagement by DII Member Companies and their Leadership

• SmartBrief• Supply Chain Tools– Model Supplier Code of Conduct– Supplier Toolkit– Supplier Due Diligence

• Revised web site

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Current Initiatives

• Monthly newsletter to all members with relevant information on ethics & compliance and the defense industry

SmartBrief

General Question and Answers